Prolonged Chip Shortage Hampers Global PC Market Growth

The ongoing chip shortage has impacted the global PC shipments which slowed to 4.6% year-on-year for the second quarter of 2021 following record-setting year-on-year growth of 35.7% for the first three months of the year.

Gartner blamed the shortage on global semiconductor to a large extent for the slowing growth and reported that 71.6 million PC units were shipped in the second quarter of 2021 – up from 68.5 million in the second quarter of last year.

“While PC demand remained above the pre-pandemic levels, this was a marked deceleration in growth compared to the record (year over year) growth of 35.7% in the first quarter of 2021, due in part to the impact of ongoing component shortages,” Gartner says.

“The global semiconductor shortage and subsequent component supply constraints have extended lead time for some enterprise mobile PC models to as long as 120 days,” says Mikako Kitagawa, research director at Gartner.

“This has led to prices increasing in the bill of materials, which vendors have passed on to end users. Moving forward, rising prices could continue to slow PC demand through the next 6 to 12 months,” Kitagawa added.

The global chip shortage which is a prolonged crisis has been increasingly affecting many industries in the last one year. The automotive industry alone, for example, is set to lose $110 billion during 2021 as the chips that power nearly all modern cars’ functionality continue to be unavailable.

In a report by the Wall Street Journal, Volkswagen warned that “the global shortage of semiconductors affecting car production would worsen over the next six months.”

Alex Hersham, CEO of Zencaro, told the Hellenic Shipping News, “the Ever Given’s blockage of the Suez Canal shone a spotlight on global supply chains in a way not previously imaginable.”

He warned that businesses need to make sure their supply chains are agile and ready to respond, and that they make the investment before it’s too late.

A report by Semiconductor Industry Association (SIA) and Boston Consulting Group (BCG) highlights the challenges of the chip shortage – a major crisis in the post-pandemic times – that can be addressed by government actions, including funding incentives to boost domestic chip production and research in various markets.

The report also calls for a level global playing field for domestic and foreign firms alike, as well as strong protection of intellectual property rights.

“Promotion of global trade and international collaboration on R&D and technology standards, investing in basic research, STEM education and advancing immigration policies that enable leading global semiconductor clusters to attract world-class talent will improve the situation,” it said.

Stating that the semiconductor chip crisis shows no signs of ending any time soon and will continue to impact the supply chains for many industries, John Neuffer, SIA president and CEO opines, “The global semiconductor shortage is a stark reminder of the risks of supply chain disruptions and the need for the U.S. government to take swift action to invest in domestic chip manufacturing and research.”

“The global chip shortage will continue to worsen for the time being,” predicted Intel CEO Pat Gelsinger, who foresees a worsening situation throughout the second half of 2021, before there’s any real hope of recovery.

Meanwhile, the top three vendors in the worldwide PC market remained unchanged year over year, with Lenovo maintaining the top spot in shipments. Lenovo recorded its fifth straight quarter of year over year growth, although its 3.6% growth trailed that of the overall PC market, said Gartner. HP’s worldwide PC shipments declined 11.3% in the second quarter of 2021 compared to a year ago.

Dell achieved its third consecutive quarter of year over year growth this period, with desk-based PCs seeing particularly strong growth of over 40%. Vendors including Apple, Acer and Asus grew faster than the market, owing to improved availability of consumer PCs.

In the long term however, semiconductor shortage is a big threat to every industry, including computer and PCs. While the chip shortage issue cannot be solved overnight, the industry players and policy makers should significantly step up the efforts to address the looming shortage of high-skill talent that threatens to constrain the semiconductor industry’s ability to keep the current pace of innovation and growth.